BDSwiss Holding Ltd, the operator of the forex and contracts for differences (CFDs) broker BDSwiss and Viverno, has been fined €100,000 by the CySEC for lapses in complying with initial margin and risk warning requirements during 2021. The penalty was imposed because BDSwiss enabled mislead clients of its offshore broker scheme to believe they were dealing with the CySEC-licensed firm. The German Jan Malkus controls the BDSwiss Group of companies.
The CySEC Fine
In particular, the Cyprus regulator fined BDSwiss for engaging in activities that resulted in the circumvention of regulatory obligations by enabling offshore companies with which it was associated to refer on the CIF’s status, as a Cyprus Investment Firm licensed by CySEC to attract clients to whom they offered investment services in CFDs without:
- requiring customers to pay initial margin protection,
- giving the necessary risk warning,
as it would have do, if the provider was the CIF, avoiding the application of the statutory
requirement.
The BDSwiss Penalty History
BDSwiss has a long track record of misleading clients. According to FinTelegram reports on BDSwiss‘ offshore operations, it temporarily ceased offshore onboarding in H1 2022. In addition, the onboarding of new clients was also suspended for weeks at the CySEC broker. We suspect that this temporary suspension of onboarding had to do with the offshore activities highlighted by FinTelegram. Since then, BDSwiss has also been active with the new Viverno brand.
Read the reports on BDSwiss (here) and Jan Malkus (here).
As exposed by FinTelegram BDSwiss operates under offshore licenses in Mauritius and Seychelles to avoid the stringent limitations imposed by the European regulator.
In 2017, it settled with CySEC, paying €150,000 for suspected violations of business conduct and an additional €5,000 administrative fine. In March 2022, the German BaFin issued a statement saying that the offshore broker BDS Markets in Mauritius has no permission to offer its regulated services in Germany. In May 2021, the FCA banned the BDSwiss Group because it acquired 99% of its UK customers through offshore entities, which had no authorization to provide regulated services in the UK.
Complaining Investors
FinTelegram has also learned that Jan Malkus is having problems with investors in BDSwiss who have invested millions in the broker’s alleged IPO and are not getting their money back. We advise traders to be extremely cautious with BDSwiss.
The question is why CySEC does not revoke the license of a CIF that systematically misleads clients with offshore constructions for years. The fine of €100,000 is not appropriate in our opinion.
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If you have any information about BDSwiss, please share it with us through our whistleblower system Whistle42.
